Here’s why the MyDeal share price is rocketing 56% today

A generous takeover offer has taken the ASX by storm this morning.

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Key points

  • The MyDeal share price is soaring on Friday, leaping 56% to reach $1
  • Its gains came after supermarket giant Woolworths announced its intent to buy an 80.2% stake in the company for $1.05 per share
  • That represents a near-63% premium on MyDeal's previous close and the company's board has been quick to recommend the offer

The Ltd (ASX: MYD) share price is launching upwards this morning after Woolworths Group Ltd (ASX: WOW) offered to buy most of the online marketplace’s shares at a 63% premium.

The supermarket giant tabled a proposal to buy 80.2% of MyDeal shares for $1.05 apiece.

The MyDeal share price closed Thursday’s session trading at 65 cents.

At the time of writing, it has surged to reach $1, representing a 55.81% gain.

Let’s take a closer look at the takeover proposition boosting the online retailer’s stock today.

Woolworths proposes MyDeal takeover

The MyDeal share price is leaping on Friday after S&P/ASX 200 Index (ASX: XJO) giant Woolworths offered to snap up most of the company’s stock for $1.05 per share.

Woolworths’ offer values MyDeal’s equity at $271.8 million and implies an enterprise value of $242.6 million.

It will also provide investors who got in on the online marketplace provider’s 2020 initial public offering (IPO) – wherein shares were offered for $1 – a 5% gain on their investment.

The MyDeal board are recommending shareholders vote in favour of the proposition. That is, unless a better offer comes along or an independent expert rules it’s not in shareholders’ best interests.

Investors representing around 76% of the company’s stock have voiced their intent to vote in favour of Woolworths’ takeover. That includes CEO Sean Senvirtne, who currently holds a 47.3% stake in MyDeal.

All the takeover goes to plan, Senvirtne will sell 60% of his holding and walk away with an 18.9% stake.

MyDeal chief product officer Kate Dockery and chief merchandising officer Dean Ramler will also retain stakes of 0.5% and 0.4% respectively.  

Senvirtne commented on the news driving the MyDeal share price sky high today, saying:

[The acquisition] will help support the growth of our retail platform by accessing Woolworths Group’s capabilities across e-commerce, supply chain, retail, loyalty and more.

The companies expect shareholders to vote on the transaction next quarter with MyDeal earmarked to be delisted after its implementation.

MyDeal share price snapshot

Today’s gains have boosted the MyDeal share price back into the long-term green.

It is now trading 34% higher than it was at the start of 2022. It’s also nearly 83% higher than this time last year.

The online retailer listed at the height of the COVID-19 online shopping boom. Its highest-ever close – at $1.71 – came on the evening following its float. The stock is currently trading 41% lower than that point.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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